The Life Satisfaction Approach to Environmental Valuation

Bruno Frey, Simon Luechinger and Alois Stutzer

Annual Review of Resource Economics, 2010, vol. 2, issue 1, 139-160

Abstract: In many countries, environmental policies and regulations are implemented to improve environmental quality and thus individuals' well-being. However, how do individuals value the environment? In this paper, we review the life satisfaction approach (LSA), which represents a new nonmarket valuation technique. The LSA builds on the recent development of subjective well-being research in economics and takes measures of reported life satisfaction as an empirical approximation to individual welfare. Microeconometric life satisfaction functions are estimated, taking into account environmental conditions along with income and other covariates. The estimated coefficients for the environmental good and income can then be used to calculate the implicit willingness to pay for the environmental good.

Keywords: subjective well-being; nonmarket valuation; cost-benefit analysis; air pollution (search for similar items in EconPapers)
JEL-codes: Q51 Q58 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (123)

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Related works:
Working Paper: The Life Satisfaction Approach to Environmental Valuation (2009)
Working Paper: The Life Satisfaction Approach to Environmental Valuation (2009)
Working Paper: The Life Satisfaction Approach to Environmental Valuation (2009)
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